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Agreement And Plan Of Merger By And Among

Agreement and Plan of Merger

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 This Agreement and Plan of Merger involves

TIGER X MEDICAL, INC. | BIOCARDIA, INC | Frost Group, LLC | ICICLE ACQUISITION CORP | Incline Village, NV | TIGER X MEDICAL, INC

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Title: AGREEMENT AND PLAN OF MERGER by and among
Governing Law: Delaware     Date: 8/25/2016
Industry: Misc. Financial Services     Law Firm: Wilson Sonsini     Sector: Financial

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Exhibit 2.1

EXECUTION VERSION

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

TIGER X MEDICAL, INC.,

BIOCARDIA, INC.,

ICICLE ACQUISITION CORP.,

and

JAY MOYES, as the Company Representative

and

STEVEN RUBIN, as the Parent Representative

Dated as of August 22, 2016


AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger is entered into as of August 22, 2016, by and among Tiger X Medical, Inc., a Delaware corporation ( “Parent” ); Icicle Acquisition Corp., a Delaware corporation and wholly-owned Subsidiary of Parent ( “Merger Sub” ); BioCardia, Inc., a Delaware corporation (the “ Company ”); Jay Moyes, as the representative of the Company Securityholders hereunder (the “ Company Representative ”); and Steven Rubin, as the initial Parent Representative. Parent, Merger Sub and Company are each a “party” and together are “parties” to this Agreement.

R E C I T A L S

WHEREAS, the Board of Directors of each of Parent, Merger Sub and the Company have each approved the acquisition of the Company, by merger of the Merger Sub with and into the Company, with Company surviving such merger, upon the terms and subject to the conditions set forth in this Agreement, whereby each of the issued and outstanding shares of the capital stock of the Company will be converted into the right to receive the Merger Consideration (as defined herein);

WHEREAS, the Board of Directors of each of Merger Sub and the Company have, pursuant to the Laws of their respective states of organization, declared that this Agreement is advisable, fair and in the best interests of their respective stockholders; and

WHEREAS, for United States federal income tax purposes, each party intends that the Merger shall qualify as a reorganization under Section 368(a) of the Code, and this Agreement is intended to be, and is hereby, adopted as a “plan of reorganization” within the meaning of Section 368(a) of the Code.

A G R E E M E N T

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound the parties agree as follows:

ARTICLE I

DEFINITIONS

For all purposes of this Agreement, except as otherwise expressly provided,

(a) the terms defined in this Article I have the meanings assigned to them in this Article I and include the plural as well as the singular,

(b) all accounting terms not otherwise defined herein have the meanings assigned under GAAP,

(c) all references in this Agreement to designated “Articles,” “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of the body of this Agreement,

(d) pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms, and

(e) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.


As used in this Agreement and the schedules or disclosure letters delivered pursuant to this Agreement, the following definitions shall apply:

“Accredited Investor” has the meaning set forth in Section 6.1(c) .

“Action” means any action, complaint, claim, charge, petition, investigation, suit or other proceeding, whether civil or criminal, in law or in equity, or before any mediator, arbitrator or Governmental Entity.

“Adjusted Exercise Price” has the meaning set forth in Section 2.11(a) .

“Adjustment Holdback Shares” has the meaning set forth in Section 2.9(a) .

“Affiliate” means with respect to any specified Person, any other Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person. The term “control” as used in the preceding sentence means the power to direct or cause the direction of the management or policies of such Person whether by ownership of voting securities, contract, or otherwise.

“Agreement” means this Agreement and Plan of Merger, as amended or supplemented, together with all exhibits, schedules and disclosure letters attached hereto or incorporated by reference.

“Approval” means any approval, authorization, clearance, consent, qualification or registration, or any waiver of any of the foregoing, required to be obtained from, or any notice, statement or other communication required to be filed with or delivered to, any Governmental Entity or any other Person.

“Authorized Action” has the meaning set forth in Section 11.16(c) and 11.17(c) , as applicable.

“Basket Amount” has the meaning set forth in Section 10.6 .

“Benefit Plan” shall mean any benefit and compensation plan, contract, policy or arrangement covering employees or former employees and leased employees, directors, officers, shareholders or independent contractors (in each case either current or former) of the Company (or predecessors thereof) or any Company ERISA Affiliate, including, but not limited to any “welfare” plan, fund or program (within the meaning of Section 3(1) of ERISA); any “pension” plan, fund or program (within the meaning of Section 3(2) of ERISA); any incentive compensation plan; any employment, consulting, termination, retention, indemnification or severance agreement, plan or arrangement; any stock ownership, stock bonus, stock option, restricted stock, stock appreciation right, profits interest, membership unit award, stock purchase, phantom stock or bonus plan; any nonqualified deferred compensation plan (within the meaning of Section 409A of the Code); and any fringe benefit or perquisite plan, arrangement or policy; in each case, (whether funded or unfunded, written or oral, qualified or nonqualified), that is sponsored, maintained or contributed to or required to be contributed to by the Company or any Company ERISA Affiliate.

“Book-Entry Shares” has the meaning set forth in Section 2.8 .

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in New York, New York.

“Capitalization” means the Company Capitalization and the Parent Capitalization, as applicable.


“Certificate of Merger” has the meaning set forth in Section 2.2 .

“Certificates” has the meaning set forth in Section 2.8 .

“Change of Control Payments” means any payment obligations of the Company or the Parent, as applicable, together with (where applicable) the employer portion of any Taxes due thereon, triggered by the consummation of the transactions contemplated by this Agreement, including (i) any severance benefits or any other payment (including golden parachute, bonus or benefits under any benefit plan) to any employee, (ii) any acceleration in the time for payment or vesting of any benefits or increase in the amount of compensation due to any employee, and (iii) any payment due to a third party triggered by the consummation of the transactions contemplated by this Agreement; provided , however , that Change of Control Payments will not include the items in Schedule 6.1(e) hereto or any Transaction Expenses.

“Closing” has the meaning set forth in Section 2.15 .

“Closing Date” means the date of the Closing as set forth in Section 2.15 .

“Closing Net Cash” means the Company Net Cash or the Parent Net Cash, as applicable.

“Closing Shares” has the meaning set forth in Section 2.9 .

“Closing Statement” has the meaning set forth in Section 2.6 .

“Code” means the Internal Revenue Code of 1986, as amended (or any successor statute thereto).

“Company” has the meaning set forth in the preamble to this Agreement.

“Company 2015 Convertible Notes” has the meaning set forth in Section 3.3 .

“Company 2016 Convertible Notes” has the meaning set forth in Section 3.3 .

“Company Adjusted Option” has the meaning set forth in Section 2.11 .

“Company Balance Sheet” means the Company’s unaudited balance sheet as of June 30, 2016.

“Company Board Recommendation” has the meaning set forth in Section 3.7 .

Company Capitalization ” means the number of shares of Company Common Stock outstanding immediately prior to the Merger, including shares issuable on conversion or exercise of (i) outstanding Company Preferred Stock, (ii) outstanding Company 2015 Convertible Notes and Company 2016 Convertible Notes, (iii) outstanding Company Stock Options (whether vested or unvested) or (iv) any other security or instrument convertible into or exercisable for Company Common Stock, but excluding up to 11,019,075 shares issuable upon exercise of options that begin vesting and become exercisable after the Closing.

“Company Common Stock” means the common stock, par value $0.001 per share, of the Company.

“Company Convertible Notes” means the Company 2015 Convertible Notes and the Company 2016 Convertible Notes, collectively.

“Company Covered Persons” has the meaning set forth in Section 3.10 .


“Company Disclosure Letter” has the meaning set forth in ARTICLE III .

Company ERISA Affiliate ” shall mean any trade or business, whether or not incorporated, that together with the Company would be deemed a “single employer” within the meaning of Section 4001 of ERISA.

“Company Financial Statements” (a) as of the date hereof, means (i) the Company’s audited balance sheet dated December 31, 2014; and (ii) the Company’s audited statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2014, and (b) as of the Closing Date, means (i) the Company’s audited balance sheets dated December 31, 2015 and December 31, 2014, and unaudited balance sheet dated June 30, 2016; and (ii) the Company’s audited statements of operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2015 and December 31, 2014, and unaudited statements of operations, changes in stockholders’ equity and cash flows for the six-month period ended June 30, 2016.

“Company Indemnified Party” has the meaning set forth in Section 10.2(a) .

“Company Intellectual Property” means the Owned Intellectual Property and the Licensed Intellectual Property, collectively.

“Company Material Agreement” has the meaning set forth in Section 3.16(a) .

Company Net Cash ” means the Company’s (a) (i) cash on-hand or held in any bank account as of the date hereof, including money market accounts or money orders, but net of uncleared checks, ACH transfers, wire transfers and similar debits, (ii) receivables, net of allowances and reserves, as of the date hereof, (iii) the Maryland Stem Cell Grant Amount, and (iv) the amount of cash proceeds from the sale of Company 2016 Convertible Notes in the bank accounts of the Company immediately prior to the Effective Time, minus (b) (i) all payables, accrued liabilities and accrued expenses (but excluding Transaction Expenses and Excluded Expenses), each outstanding or accrued as of the date hereof, (ii) all Indebtedness and Change of Control Payments, each as of the Effective Time, whether or not any such Indebtedness and Change of Control Payments would be required to be reflected in the financial statements of the Company in accordance with GAAP, and (iii) all liabilities and expenses incurred or accrued by the Company outside of the ordinary course of business consistent with past practices (excluding Transaction Expenses) after the date hereof and at or prior to the Effective Time, whether or not any such liabilities and expenses would be required to be reflected in the financial statements of the Company in accordance with GAAP. For the avoidance of doubt, any liability or expense arising in connection with or related to a violation of Section 6.1(e) hereof shall be deemed outside the ordinary course of business pursuant to this definition. Except as otherwise provided herein, Company Net Cash (and each component thereof) shall be determined in accordance with GAAP, applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the audited financial statements of the Company for the most recent fiscal year end.

“Company Patents” means all Patents included in the Owned Intellectual Property and all Patents included in the Licensed Intellectual Property to the extent exclusively licensed to the Company.

“Company Policy” has the meaning set forth in Section 3.21 .

“Company Preferred Stock” means the preferred stock, par value $0.001 per share, of the Company.


“Company Representative” has the meaning set forth in the Recitals.

“Company Securityholders” means the Company Stockholders and the holders of Company Stock Options.

“Company Shares” has the meaning set forth in Section 2.7 .

“Company Stock Options” means the outstanding options to purchase Company Common Stock as of immediately prior to the Effective Time.

“Company Stock Plans” means the Company’s 2002 Stock Option Plan and 2016 Equity Incentive Plan.

“Company Stockholder” means any holder of Company Shares as of the Effective Time. For the avoidance of doubt, Company Stockholder includes the holders of Company Preferred Stock and Company Convertible Notes that will convert into Company Shares immediately prior to the Effective Time.

“Company Stockholder Approval” means the requisite affirmative consent of the holders of capital stock the Company approving the Merger and the other transactions contemplated hereby pursuant to the DGCL and the certificate of incorporation, bylaws or other organizational documents of the Company, including the affirmative consent of the holders of (a) at least a majority of the outstanding shares of Company Common Stock and Company Preferred Stock to the Merger and (b) at least a majority of the Company Preferred Stock to the conversion of the Company Preferred Stock to Company Common Stock as of immediately prior to the Effective Time.

“Company Warrants” means the Company’s issued and outstanding warrants to purchase Company Common Stock or Company Preferred Stock as of immediately prior to the Effective Time.

“Contract” means any agreement, contract, arrangement, bond, loan commitment, franchise, indemnity, indenture, instrument, lease, license or understanding, whether or not in writing to which a Person is a party or by which such Person is bound.

“Damages” has the meaning set forth in Section 10.2(a) .

“DGCL” has the meaning set forth in Section 2.1 .

“Director Nominees” has the meaning set forth in Section 5.6 .

“Disputed Amounts” has the meaning set forth in Section 2.18(b) .

“Dissenting Shares” has the meaning set forth in Section 2.10 .

“Disqualification Events” has the meaning set forth in Section 3.10 .

“Effective Time” has the meaning set forth in Section 2.2 .

“Eligible Market” means the NASDAQ Stock Market or any other stock exchange upon which shares of Parent Common Stock shall be listed at any given time.

“Encumbrance” means any claim, charge, easement, encumbrance, lease, covenant, security interest, lien, option, pledge, rights of others, or restriction (whether on voting, sale, transfer, disposition or otherwise), whether imposed by agreement, understanding, law, equity or otherwise, except for any restrictions on transfer generally arising under any applicable federal or state securities law.


Environmental Laws ” means all Laws, all contractual obligations and all common law concerning public health or safety, worker health or safety, pollution or protection of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control or cleanup of, or exposure to, any hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated biphenyls, noise, radiation, odors or mold.

ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Exchange Ratio” has the meaning set forth in Section 2.7 .

“Excluded Expenses” means the expenses identified as such on Schedule 1.1 hereto.

“FDA” means the United States Food and Drug Administration, or any successor entity thereto.

“Final Exchange Ratio” means the Exchange Ratio as fully and finally determined in accordance with Section 2.18 hereof.

“Form 8-K” has the meaning set forth in Section 6.1(d) .

“GAAP” means generally accepted accounting principles in the United States, as in effect from time to time.

“Governmental Entity” means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.

Hazardous Substance ” means any substance, waste or material which is regulated by or as to which Liability or standards of conduct may be imposed under any Environmental Law, including petroleum, petroleum by-products and derivatives, mold, noise, odor, asbestos, lead and silica.

“Holdback Period” has the meaning set forth in Section 10.3 .

“Holdback Shares” has the meaning set forth in Section 2.9(a) .

“ICE” has the meaning set forth in Section 3.18(a) .

“Indebtedness” means, without duplication, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business consistent with past practice and any deferred liability related to the grant from the Maryland Stem Cell Research Fund), (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments (excluding the Company 2015 Convertible Notes and Company 2016 Convertible Notes to the extent converted at or prior to the Closing); (d) obligations under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease


obligations; (f) reimbursement obligations under any letter of credit, banker’s acceptance or similar credit transactions; and (g) guarantees made by the Company or the Parent, as applicable, on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f).

“Indemnity Holdback Shares” has the meaning set forth in Section 2.9(a) .

“Independent Accountant” has the meaning set forth in Section 2.18(b) .

“Insolvent” means, with respect to any Person, (i) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s total Liabilities as they come due, (ii) such Person is unable to pay its debts and Liabilities, subordinated, contingent or otherwise, as such debts and Liabilities become absolute and matured, (iii) such Person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has unreasonably small capital with which to conduct its business as such business is now conducted and is proposed to be conducted.

“Intellectual Property” means all intellectual property, industrial property, or proprietary rights arising in any jurisdiction throughout the world, including but not limited to the following: (a) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all Patents thereof, (b) all trademarks, service marks, brand names, certification marks, trade dress, logos, trade names, domain names, assumed names and corporate names, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith, (c) all works of authorship (whether copyrightable or not), all copyrights, and all applications, registrations, and renewals in connection therewith, (d) all mask works and all applications, registrations, and renewals in connection therewith, (e) all trade secrets and confidential information (including ideas, research and development, know-how, formulas, compositions, experimental designs, manufacturing and production processes and techniques, technical and clinical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software (including source code, object code, diagrams, data and related documentation), (g) all other similar intellectual and proprietary rights, (h) all copies and tangible embodiments of the foregoing, in whatever form or medium, (i) licenses, immunities, covenants not to sue and the like relating to the foregoing, and (j) any claims or causes of action arising out of or related to any infringement or misappropriation of any of the foregoing.

“Intellectual Property Licenses” has the meaning set forth in Section 3.12(f) .

“Investor Letter” has the meaning set forth in Section 6.1(c) .

“Knowledge” or “Known” shall mean, (A) with respect to the Company, the actual knowledge, after reasonable investigation with respect to matters under his supervision, of Peter Altman, David McClung, Eric Druckers, Andrew Mackenzie, Phil Pesta, and Rick Allen, and (B) with respect to the Parent or the Merger Sub, the actual knowledge, after reasonable investigation with respect to matters under his supervision, of Steven Rubin and Joshua Weingard.

“Law” means any federal, state or local law, statute, rule, regulation, ordinance, code, regulation, arbitration award or other legally enforceable requirement of or by any Governmental Entity and any Order.

“Letter of Transmittal” has the meaning set forth in Section 2.14(a) .


“Liability” means any liability or obligation (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated, unliquidated or otherwise, and whether due or to become due, and regardless of when or by whom asserted).

“Liability Cap” has the meaning set forth in Sections 10.4 and 10.5 , as applicable.

“Lock-Up Agreements” has the meaning set forth in Section 5.4 .

“Maryland Stem Cell Grant Amount” means cash amounts not yet received by the Company under the $750,000 grant from the Maryland Stem Cell Research Fund as of the Closing Date.

“Material Adverse Effect” means, with respect to any Person, (i) a material adverse effect on the condition (financial or otherwise), business, prospects, assets, liabilities, or results of operations of such Person; or (ii) a material adverse effect on the ability of such Person to consummate the transactions contemplated by this Agreement.

“Merger” has the meaning set forth in Section 2.1 .

“Merger Consideration” has the meaning set forth in Section 2.7 .

“Merger Sub” has the meaning set forth in the preamble to this Agreement.

“Note Conversion” has the meaning set forth in Section 7.1(f) .

“Order” means any decree, injunction, judgment, order, ruling, assessment or writ of any Governmental Entity.

“Outside Termination Date” has the meaning set forth in Section 9.1(b)(i) .

“Parent” has the meaning set forth in the preamble to this Agreement.

“Parent Capitalization” means the number of shares of Parent Common Stock outstanding immediately prior to the Merger, including shares issuable on conversion of Parent Preferred Stock or exercise of outstanding Parent Stock Options or Parent Warrants.

“Parent Common Stock” means the common stock, par value $0.001 per share, of the Parent.

“Parent Covered Persons” has the meaning set forth in Section 4.6 .

“Parent Disclosure Letter” has the meaning set forth in ARTICLE IV .

“Parent Financial Statements” has the meaning set forth in Section 4.5 .

“Parent Indemnified Party” has the meaning set forth in Section 10.2(b) .

Parent Net Cash ” means the Parent’s and Merger Sub’s consolidated (a) (i) cash on-hand or held in any bank account as of the date hereof, including money market accounts or money orders, but net of uncleared checks, ACH transfers, wire transfers and similar debits, and (ii) receivables, net of allowances and reserves, as of the date hereof, minus (b) (i) all payables, accrued liabilities and accrued expenses (but excluding Transaction Expenses), each outstanding or accrued as of the date hereof, (ii) all Indebtedness and Change of Control Payments, each as of the Effective Time, whether or not any such


Indebtedness and Change of Control Payments would be required to be reflected in the consolidated financial statements of Parent and Merger Sub in accordance with GAAP, and (iii) all liabilities and expenses incurred or accrued by Parent or Merger Sub outside of the ordinary course of business consistent with past practices (excluding Transaction Expenses) after the date hereof and at or prior to the Effective Time, whether or not any such liabilities and expenses would be required to be reflected in the consolidated financial statements of Parent and Merger Sub in accordance with GAAP. For the avoidance of doubt, any liability or expense arising in connection with or related to a violation of Section 6.1(e) hereof shall be deemed outside the ordinary course of business pursuant to this definition. Except as otherwise provided herein, Parent Net Cash (and each component thereof) shall be determined in accordance with GAAP, applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the audited consolidated financial statements of Parent and its Subsidiaries for the most recent fiscal year end.

“Parent Preferred Stock” means the shares of preferred stock, par value $0.001 per share, of the Parent.

“Parent Representative” has the meaning set forth in Section 11.17(a) .

“Parent SEC Reports” has the meaning set forth in Section 4.5 .

“Parent Stock Options” means the Parent’s issued and outstanding options to purchase Parent Common Stock.

“Parent Warrants” means the Parent’s issued and outstanding warrants to purchase Parent Common Stock or Parent Preferred Stock.

“Patents” means any and all of the following, arising in any jurisdiction throughout the world: (a) issued patents, (b) pending patent applications (whether provisional or non-provisional), (c) divisionals, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and patents resulting from any opposition or post-grant proceedings, and (d) any other forms of rights similar to the foregoing that are issued by a Governmental Entity.

“Paying Agent” has the meaning set forth in Section 2.14(a) .

“Permitted Encumbrance” has the meaning set forth in Section 3.17 .

“Person” means an association, a corporation, an individual, a partnership, a limited liability company, a trust or any other entity or organization, including a Governmental Entity.

“Personal Information” has the meaning set forth in Section 3.13(i) .

“Post-Closing Statement” has the meaning set forth in Section 2.18(a) .

Pre-Closing Period ” means any taxable period ending on or prior to the Closing Date and the portion of any Straddle Period ending on the Closing Date.

“Pre-Closing Tax Returns” has the meaning set forth in Section 8.2 .

“Preferred Conversion” has the meaning set forth in Section 7.1(e) .


“Preliminary Exchange Ratio” means the good faith estimate of the Exchange Ratio as determined in accordance with Section 2.6 hereof.

“Processing Agreement” has the meaning set forth in Section 3.13(i) .

“Products” means the products and product candidates of the Company set forth in Section 3.23 of the Company Disclosure Letter.

“Regulatory Authorities” has the meaning set forth in Section 3.13(b) .

“Related Person” has the meaning set forth in Section 3.20 .

“Representative” has the meaning set forth in Section 2.18(a) .

“Resolution Period” has the meaning set forth in Section 2.18(b) .

“Restraints” has the meaning set forth in Section 7.1(d) .

“Review Period” has the meaning set forth in Section 2.18(b) .

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“SSA” has the meaning set forth in Section 3.13(h) .

“Statement of Objections” has the meaning set forth in Section 2.18(b) .

“Stockholder Representation” has the meaning set forth in Section 10.2 .

“Straddle Period” has the meaning set forth in Section 8.3 .

“Straddle Period Returns” has the meaning set forth in Section 8.3 .

“Subsidiary” or “Subsidiaries” of any Person means any corporation, partnership, limited liability company or other legal entity in which such Person (either alone or through or together with any other Subsidiary), owns, directly or indirectly, fifty percent (50%) or more of the stock or other equity or ownership interests, the holder of which is generally entitled to elect a majority of the board of directors or other governing body of such legal entity.

“Surviving Entity” has the meaning set forth in Section 2.1 .

“Tax” (and, with correlative meaning, “Taxes” ) means: (i) any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, escheat, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value added, transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any governmental authority; and (ii) any liability of the Company for the payment of amounts with respect to payments of a type described in clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group, or as a result of any obligation of the Company under any Tax Sharing Arrangement or Tax Indemnity Agreement.


“Tax Indemnity Agreement” means any written or unwritten agreement or arrangement pursuant to which the Company may be required to indemnify or reimburse another party for any liability relating to Taxes.

“Tax Return” means any return, report or similar statement required to be filed with respect to any Tax (including any attached schedules), including any information return, claim for refund, amended return or declaration of estimated Tax.

“Tax Sharing Arrangement” means any written or unwritten agreement or arrangement for the allocation or payment of Tax liabilities or payment for Tax benefits with respect to a consolidated, combined or unitary Tax Return which includes the Company.

“Transaction Expenses” means all fees and expenses incurred at or prior to the Closing in connection with the preparation, negotiation and execution of this Agreement and the related documents, and the performance and consummation of the Merger and the other transactions contemplated hereby and thereby, including (a) accounting fees and expenses related to the preparation and audit of the Company’s 2016 quarterly financial statements and any Parent financial statements, as applicable, and any proposed SEC filings under PCAOB standards and (b) costs related to the renewal of Parent’s directors’ and officers’ liability insurance coverage and any extended reporting period endorsement thereunder to provide directors and officers of Parent prior to the Closing with run-off coverage after the Closing (or similar coverage).

“Warrant Termination” has the meaning set forth in Section 2.12 .

ARTICLE II

THE MERGER

2.1 The Merger . At the Effective Time and upon the terms and subject to the conditions of this Agreement, including the satisfaction of the conditions precedent set forth in ARTICLE VII herein, and in accordance with the Delaware General Corporation Law (the “ DGCL ”), Merger Sub shall be merged with and into the Company (the “ Merger ”). Following the Merger, (a) the Company shall continue as the surviving entity (the “ Surviving Entity ”) and shall continue its corporate existence under the laws of the State of Delaware and shall be a wholly owned Subsidiary of Parent and (b) the separate corporate existence of the Merger Sub shall cease. Parent, as the sole owner of Merger Sub, hereby approves the Merger and this Agreement.

2.2 Effective Time . Subject to the terms and conditions set forth in this Agreement, on the Closing Date a Certificate of Merger, substantially in the form attached hereto as Exhibit A (the “ Certificate of Merger ”), shall be duly executed and acknowledged by the Company and thereafter delivered to the Secretary of State of Delaware for filing. The Merger shall become effective at such time as a properly executed copy of the Certificate of Merger is duly filed with the Secretary of State of Delaware, or such later time as may be agreed by the parties in writing and as set forth in the Certificate of Merger (the time the Merger becomes effective being referred to herein as the “ Effective Time ”).

2.3 Effects of the Merger . The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Entity, and all debts, liabilities and obligations of the Company and Merger Sub shall become the debts, liabilities and obligations of the Surviving Entity.


2.4 Certificate of Incorporation and Bylaws .

(a) At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub or the Company, or any of their respective stockholders, the certificate of incorporation of the Merger Sub, as in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Entity until thereafter amended in accordance with the DGCL and such certificate of incorporation; provided that as of the Effective Time, such certificate of incorporation shall be amended to provide that the name of the Surviving Entity is BioCardia, Inc.

(b) At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub or the Company, or any of their respective stockholders, the bylaws of Merger Sub as in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Entity until thereafter amended in accordance with the DGCL, the certificate of incorporation of the Surviving Entity and such bylaws; provided that all references in such bylaws to Merger Sub shall be amended to refer to BioCardia, Inc.

2.5 Directors and Officers . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub or the Company, the directors and officers of the Surviving Entity shall be the directors and officers listed in Schedule 2.5 hereto, until their respective successors are duly elected or appointed and qualified.

2.6 Closing Statement . At least five (5) Business Days before the Closing, each of the Company and the Parent shall prepare and deliver to the other party a statement (each, a “ Closing Statement ”) setting forth its good faith estimate, with reasonably detailed calculations and supporting documentation, of its Closing Net Cash and Capitalization (which, in the case of Parent, shall consist of a report from Parent’s transfer agent with respect to capital stock), and a certificate of its Chief Financial Officer that the calculation of Closing Net Cash was prepared in accordance with GAAP (except as otherwise provided in the applicable definition of Company Net Cash or Parent Net Cash), applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the audited financial statements of the Company or Parent and its Subsidiaries, as applicable, for the most recent fiscal year end, as if such Closing Statement was being prepared and audited as of a fiscal year end. The parties shall cooperate in good faith to finalize the Closing Statements, and provide each other with reasonable access as necessary to their books, records and personnel pursuant to Section 5.5 . Once the Closing Statements are finalized, the parties shall calculate the Preliminary Exchange Ratio based on the figures set forth in the Closing Statements.

2.7 Conversion of Company Shares; Exchange Ratio . Subject to the provisions of this Article II and Article X, at the Effective Time, by virtue of the Merger (and without any action on the part of Parent, Merger Sub or the Company or any of their respective stockholders) each share of Company Common Stock (in each case other than Dissenting Shares) issued and outstanding immediately prior to the Effective Time (collectively, the “ Company Shares ”) shall be converted into the right to receive a number of fully paid and nonassessable shares of Parent Common Stock equal to the Exchange Ratio (such shares, the “ Merger Consideration ”). No certificates or scrip representing fractional shares shall be issued upon the surrender for exchange of Certificates or Book-Entry Shares, no dividend or distribution of Parent shall relate to such fractional share interests and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder of Parent but, in lieu thereof, each holder who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock that otherwise would be received by such holder) shall, receive from Parent, in lieu of such fractional share, one share of Parent Common Stock.


The “Exchange Ratio” shall equal the Merger Share Number divided by the Company Capitalization. “ Merger Share Number ” means a number of shares of Parent Common Stock equal to the Parent Capitalization (i) plus one share for each $0.1516 that Parent Net Cash is less than $19,500,000 or Company Net Cash is more than $3,500,000 and (ii) minus one share for each $0.1516 that Parent Net Cash is more than $19,500,000 or Company Net Cash is less than $3,500,000.

2.8 Exchange of Company Shares for Merger Consideration . At the Effective Time, each Company Share issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each certificate previously evidencing any such Company Share (the “ Certificates ”) and each uncertificated book entry in the Company’s records (the “ Book-Entry Shares ”) shall thereafter represent the right to receive only the Merger Consideration.

2.9 Delivery and Holdback of Merger Consideration .

(a) Subject to the other provisions of this Article II and Article X, after the Effective Time: (i) upon delivery of a Letter of Transmittal and other documents required pursuant to Section 2.14 , Parent shall issue eighty percent (80%) of the Merger Consideration due to each Company Stockholder calculated using the Preliminary Exchange Ratio (the “ Closing Shares ”) and (ii) Parent shall issue but hold back the remaining twenty percent (20%) of the Merger Consideration due in respect of such Company Stockholder’s Company Shares calculated using the Preliminary Exchange Ratio, half of which shall be deemed “ Indemnity Holdback Shares ” hereunder and the other half of which shall be deemed “ Adjustment Holdback Shares ” hereunder (the Indemnity Holdback Shares and the Adjustment Holdback Shares together, the “ Holdback Shares ”).

(b) If the Final Exchange Ratio (as determined in accordance with the terms of this Agreement) exceeds the Preliminary Exchange Ratio, then upon delivery of a Letter of Transmittal and any other documents required pursuant to Section 2.14 , (i) Parent shall issue to each Company Stockholder ninety percent (90%) of the shares of Merger Consideration due in respect of such Company Stockholder’s Company Shares that is attributable to the difference between the Final Exchange Ratio and Preliminary Exchange Ratio, (ii) Parent shall issue but hold back the remaining ten percent (10%) of the excess shares of Merger Consideration due in respect of such Company Stockholder’s Company Shares derived from the difference between the Final Exchange Ratio and Preliminary Exchange Ratio (which shall be deemed Indemnity Holdback Shares hereunder), and (iii) Parent shall release to each Company Stockholder his, her or its Adjustment Holdback Shares.

(c) If the Final Exchange Ratio (as determined in accordance with the terms of this Agreement) is less than the Preliminary Exchange Ratio, then (i) there shall be no change to the number of Closing Shares, (ii) Parent shall cancel and retire, on a pro rata basis based on the number of Holdback Shares issued to each Company Stockholder, a number of the Holdback Shares equal to the total number of deficit shares of Merger Consideration derived from the difference between the Preliminary Exchange Ratio and the Final Exchange Ratio (the “ Holdback Share Reduction ”), and (iii) Parent shall release to each Company Stockholder, upon delivery of a Letter of Transmittal and any other documents required pursuant to Section 2.14 , any remaining Adjustment Holdback Shares issued in the name of such Company Stockholder that were not canceled and retired in the Holdback Share Reduction, if any.

(d) Notwithstanding anything to the foregoing, the Holdback Shares will be issued to and owned by the holders of Company Shares upon the Closing Date and, subject to the terms hereof, each holder of Company Shares shall have all the rights of a stockholder of Parent with respect to such Holdback Shares (other than the right to transfer or sell such Holdback Shares) while they are in possession of Parent (and have not been cancelled and retired as provided herein), including without


limitation, the right to vote the Holdback Shares and the right to receive any consideration in connection with the Holdback Shares in connection with any (i) any stock dividend, stock split or other change in the Holdback Shares, (ii) any dividend of cash or other property on the Holdback Shares, or (iii) any merger or sale of all or substantially all of the assets or other acquisition of Parent; provided, however, that any such stock dividend, split shares, distribution or consideration in respect of the Holdback Shares shall be held back by Parent as additional security for the indemnification obligations of the Company Stockholders hereunder pursuant to Article X (and any additional shares of Parent Common Stock shall be deemed Indemnity Holdback Shares and Holdback Shares hereunder), and shall not be released or delivered to any Company Stockholder to the extent that the corresponding Holdback Share is canceled or retired hereunder or to the extent such amount is necessary to satisfy indemnification obligations hereunder. In the event that any Holdback Shares are canceled and retired as contemplated hereby, all rights of each holder of Company Shares in respect thereof shall immediately terminate.

2.10 Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, any Company Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has exercised and perfected appraisal or dissenters rights for such shares in accordance with Section 262 of the DGCL and has not effectively withdrawn or lost such appraisal rights (collectively, the “ Dissenting Shares ”) shall not be converted into or represent the right to consideration for Company Shares set forth in Section 2.7 , and the holder or holders of such shares shall be entitled only to such rights as may be granted to such holder or holders in Section 262 of the DGCL. Notwithstanding the provisions above, if any holder of Dissenting Shares shall effectively withdraw or lose (through failure to perfect or otherwise) such holder’s appraisal rights and dissenters rights under Section 262 of the DGCL, then, as of the later of the Effective Time and the occurrence of such event, such holder’s shares shall automatically be converted into and represent only the right to receive the consideration for Company Shares set forth in Section 2.7 , without interest, upon surrender of the certificate representing such shares in accordance with the terms of this Agreement. The Company shall give Parent: (a) prompt notice of any written demands for appraisal of any Company Shares, attempted withdrawals of such demands and any other instruments served pursuant to Section 262 of the DGCL and received by the Company relating to rights to be paid the “fair value” of Dissenting Shares, as provided in Section 262 of the DGCL; and (b) the opportunity to participate in, and after the Closing, direct, all negotiations and Actions with respect to demands for appraisal under Section 262 of the DGCL. The Company shall not, except with the prior written consent of Parent, voluntarily make or agree to make any payment with respect to any demands for appraisals of Company Shares. The Company or Surviving Entity, as applicable under the DGCL, shall comply with all notice requirements under Section 262 of the DGCL.

2.11 Company Options .

(a) Company Stock Options . Subject to the provisions of this Article II, at the Effective Time, each Company Stock Option, whether vested or unvested, shall be assumed by Parent and converted into an option to acquire, on the same terms and conditions as were applicable under such Company Stock Option, including vesting, a number of shares of Parent Common Stock equal to the number of shares of Company Common Stock subject to such Company Stock Option immediately before the Effective Time multiplied by the Preliminary Exchange Ratio (rounded down to the nearest whole share), at the Adjusted Exercise Price for such assumed option (each, as so adjusted, a “ Company Adjusted Option ”). The exercise price of the Company Adjusted Option, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in order to comply with Section 409A of the Code; provided that in the case of any Company Stock Option to which Section 421 of the Code applies by reason of its qualification under Section 422 of the Code, the exercise price of the option, the number of shares purchasable pursuant to such option and the terms and conditions of exercise of such option shall be determined in order to comply with Section


424 of the Code. Following the Effective Time, Parent will issue to each person who, immediately prior to the Effective Time, was a holder of a Company Stock Option a document evidencing the foregoing assumption of such option by Parent. It is the intention of the parties that each Company Stock Option so assumed by Parent shall qualify following the Effective Time as an incentive stock option as defined in Section 422 of the Code to the extent permitted under Section 422 of the Code and to the extent such option qualified as an incentive stock option prior to the Effective Time. For purposes of this Agreement, the “ Adjusted Exercise Price ” for any Company Adjusted Option shall mean the price per share of Parent Common Stock equal to the price per share under such Company Stock Option divided by the Preliminary Exchange Ratio (rounded up to the nearest cent).

(b) Prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any committee administering the Company equity incentive plans) shall adopt such resolutions or take such other actions as may be required to effect the foregoing as of the Effective Time.

(c) Prior to the Effective Time, the Company shall deliver to the holders of Company Adjusted Options appropriate notices setting forth such holders’ rights pursuant to the respective plans and this Agreement.

(d) At the Effective Time, by virtue of the Merger, the Company Stock Plans shall be assumed by Parent, with the result that all obligations of the Company under the Company Stock Plans, including with respect to awards outstanding at the Effective Time under the Company Stock Plans, shall be obligations of the Parent following the Effective Time. Prior to the Effective Time, the Parent shall take all necessary actions for such assumption of the Company Stock Plans, including the reservation and issuance of Parent Common Stock in a number at least equal to the number of shares of Parent Common Stock that will be subject to Company Adjusted Options.

2.12 Treatment of Company Warrants . The Company shall deliver to each holder of a Company Warrant notice of the Merger, which notice shall generally describe the terms of the Merger, have attached a copy of this Agreement, and otherwise comply with the terms of the Company Warrants. The Company shall take any reasonable required actions to permit the holders of the Company Warrants to exercise each Company Warrant conditional upon the consummation of the Merger. Any unexercised Company Warrants shall be cancelled at the Effective Time for no consideration or payment (the “ Warrant Termination ”). Any holder of a Company Warrant who exercises such warrant in accordance with this Section prior to the Effective Time shall be treated as a holder of Company Common Stock in the Merger with respect to any capital stock issued upon such exercise.

2.13 Merger Sub Common Stock . Each share of Merger Sub common stock issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the Parent, Merger Sub or the Company or any of their respective stockholders, be converted into the right to receive one (1) fully paid and nonassessable share of common stock of the Surviving Entity and shall constitute the only outstanding capital stock of the Surviving Entity. From and after the Effective Time, all certificates representing the common stock of Merger Sub shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Entity into which they were converted in accordance with the immediately preceding sentence.

2.14 Delivery of Certificates, Book-Entry Shares and Letters of Transmittal .

(a) Delivery . As soon as reasonably practicable after the Effective Time, Parent or a paying agent engaged by Parent (the “ Paying Agent ”) shall deliver to each holder of record of a Certificate or Certificates or Book-Entry Shares that immediately prior to the Effective Time represented Company Shares (other than Dissenting Shares) (i) a Letter of Transmittal in substantially the form


attached hereto as Exhibit B (each, a “ Letter of Transmittal ”), pursuant to which each Company Stockholder shall make the Stockholder Representations contained therein (among other things), and (ii) instructions for use in effecting the surrender of the Certificate(s) or Book-Entry Shares to which the holder thereof is entitled. Upon surrender of such Certificate(s) (or affidavits of loss in lieu thereof in accordance with Section 2.14(c) below) or Book-Entry Shares for cancellation by Parent, together with such duly completed and validly executed Letter of Transmittal, Parent or the Paying Agent shall deliver the portion of the Merger Consideration due to such holder pursuant to this Article II (in accordance with the terms hereof). Upon delivery of such Merger Consideration, the Certificate(s) and Book-Entry Shares so surrendered by the holder of Company Shares shall forthwith be canceled. In the case of Company Shares that are not represented by Certificates or Book-Entry Shares, the parties shall make such adjustments to this Section 2 as are necessary or appropriate to implement the same purpose and effect that this Section 2 has with respect to Company Shares that are represented by Certificates or Book-Entry Shares, provided however that each holder of Company Shares shall be required to submit a Letter of Transmittal as provided herein regardless of whether their Company Shares are represented by Certificates or Book-Entry Shares or otherwise.

(b) No Further Transfers . The Merger Consideration paid upon the surrender of Company Shares in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such Company Shares. From and after the Effective Time, there shall be no further registration of transfers on the transfer books of the Surviving Entity of the Company Shares that were outstanding immediately prior to the Effective Time.

(c) Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed, and, if required by Parent, the written agreement by such Person to indemnify Parent and Surviving Entity against any claim that may be made against it with respect to such Certificate, in addition to any other delivery required to be made hereunder, Parent shall deliver in exchange for such lost, stolen or destroyed Certificate the applicable Merger Consideration with respect thereto, subject to all of the other terms and conditions hereof.

(d) Escheat . None of Parent, Merger Sub, the Company or the Surviving Entity, or any of their respective directors, officers, employees and agents shall be liable to any person in respect of any shares of Parent Common Stock delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate shall not have been surrendered prior to five years after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration payable to the holder of such Certificate formerly representing Company Shares, would otherwise escheat to or become the property of any Governmental Entity), any such Merger Consideration shall, to the extent permitted by applicable Law, become the property of Parent, free and clear of all claims or interest of any person previously entitled thereto.

2.15 The Closing . Upon the terms and subject to the conditions of this Agreement, the transactions contemplated by this Agreement shall take place at a closing (the “ Closing ”) to be held at such location and time as agreed and specified by the parties, provided that all conditions to closing have been satisfied or waived and closing deliveries required of the parties in this ARTICLE II have been delivered (the day on which the Closing takes place being the “ Closing Date ”). The Closing may, with the consent of all parties, take place by delivering an exchange of documents by facsimile transmission or electronic mail.

2.16 Closing Deliveries by the Company . At the Closing, the Company shall deliver or cause to be delivered to Parent and Merger Sub:


(a) certificates of the Secretary of State of the State of Delaware dated not more than five (5) Business Days prior to the Closing Date, attesting to the incorporation and good standing of the Company as a corporation in its jurisdiction of incorporation;

(b) copies, certified by the Secretary of State of Delaware, of the certificate of incorporation of the Company, and all amendments thereto;

(c) a certificate of the Secretary or Assistant Secretary of the Company as of the Closing Date, certifying (i) the bylaws of the Company and all amendments thereto, (ii) the resolutions of the Board of Directors of the Company authorizing the Company’s execution, delivery and performance of this Agreement, the consummation of the transactions contemplated herein, declaring this Agreement is advisable, fair, and in the best interests of the Company’s stockholders, and authorizing the taking of all such other corporate action as shall have been required as a condition to, or in connection with the consummation of the contemplated transactions and (iii) the incumbency of all officers of the Company executing this Agreement and any document executed and delivered in connection herewith;

(d) a certificate of the president of the Company certifying as to the matters set forth in Section 7.1(a) , (b) and (h) ;

(e) a certificate from the Company meeting the requirements of Treasury Regulation Section 1.1445-2(c)(3) providing that the Company Shares would not constitute, to any extent, a United States real property interest within the meaning of Section 897(c) of the Code; and

(f) the Certificate of Merger duly executed by the Company.

2.17 Closing Deliveries by Parent and Merger Sub At the Closing, Parent and/or Merger Sub, as applicable, shall deliver to the Company:

(a) certificates of the Secretary of State of the State of Delaware dated not more than five (5) Business Days prior to the Closing Date, attesting to the incorporation and good standing of each of Parent and Merger Sub as a corporation in its jurisdiction of incorporation;

(b) a certificate of the Secretary or Assistant Secretary of Parent as of the Closing Date, certifying (i) the bylaws of Parent and all amendments thereto, (ii) resolutions of the Board of Directors of Parent authorizing Parent’s execution, delivery and performance of this Agreement, the consummation of the transactions contemplated herein, declaring this Agreement is advisable, fair, and in the best interests of Merger Sub’s stockholders, and authorizing the taking of all such other corporate action as shall have been required as a condition to, or in connection with the consummation of the contemplated transactions, and (iii) the incumbency of all officers of Parent executing this Agreement and any document executed and delivered in connection herewith;

(c) a certificate of the Secretary or Assistant Secretary of Merger Sub as of the Closing Date, certifying (i) the bylaws of Merger Sub and all amendments thereto, (ii) the resolutions of the Board of Directors of Merger Sub authorizing Merger Sub’s execution, delivery and performance of this Agreement, the consummation of the transactions contemplated herein, and the taking of all such other corporate action as shall have been required as a condition to, or in connection with the consummation of the contemplated transactions, and (iii) the incumbency of all officers of Merger Sub executing this Agreement and any document executed and delivered in connection herewith;

(d) copies, certified by the Secretary of State of Delaware, of the certificate of incorporation of Parent and Merger Sub and all amendments thereto;


(e) a certificate of the president of Parent certifying as to the matters set forth in Section 7.2(a) , (b) and (f) ;

(f) resignations of (i) Subbarao Uppaluri, Steven Rubin and Stephen Liu from the Parent board of directors and (ii) the officers of Parent and Merger Sub from the offices held by them as of the Effective Time; and

(g) the Certificate of Merger duly executed by the Merger Sub.

2.18 Calculation of Final Exchange Ratio .

(a) Post-Closing Statement . Within thirty (30) days following the Closing Date, Parent shall prepare and deliver to each of Parent Representative and Company Representative (each, a “ Representative ”) a statement (the “ Post-Closing Statement ”) setting forth the final calculations of Company Net Cash, Parent Net Cash, Company Capitalization, Parent Capitalization (which shall consist of a report from Parent’s transfer agent with respect to capital stock) and the Final Exchange Ratio, and a certificate of the Chief Financial Officer of the Parent that the Company Net Cash and the Parent Net Cash were determined in accordance with GAAP (except as otherwise provided in the applicable definition of Company Net Cash and Parent Net Cash) applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the audited financial statements of the Company or Parent, as applicable, for the most recent fiscal year end of the Company and the Parent, as applicable, as if such Post-Closing Statement was being prepared and audited as of a fiscal year end.

(b) Dispute Resolution. After receipt of the Post-Closing Statement, each Representative shall have thirty (30) days (the “ Review Period ”) to review the Post-Closing Statement. During the Review Period, each Representative and its accountants (the fees and expenses of which shall be paid by Parent) shall have full access to the books and records of the Parent and the Surviving Entity, the personnel of, and work papers prepared by, Parent, the Surviving Entity and/or their respective accountants to the extent that they relate to the Post-Closing Statement and to such historical financial information relating to the Post-Closing Statement as such Representative may reasonably request for the purpose of reviewing the Post-Closing Statement and to prepare a Statement of Objections (as defined below), provided, that such access shall be in a manner that does not materially interfere with the normal business operations of the Parent or the Surviving Entity. On or prior to the last day of the Review Period, each Representative may object to the Post-Closing Statement by delivering to the Parent and the other Representative a written statement setting forth its objections in reasonable detail, indicating each disputed item or amount and the basis for its disagreement therewith (the “ Statement of Objections ”). If a Representative fails to deliver the Statement of Objections before the expiration of the Review Period, the Final Exchange Ratio reflected in the Post-Closing Statement shall be deemed to have been accepted by such Representative. If a Representative delivers the Statement of Objections before the expiration of the Review Period, the Parent and each Representative shall negotiate in good faith to resolve such objections within thirty (30) days after the delivery of the Statement of Objections (the “ Resolution Period ”), and, if the same are so resolved within the Resolution Period, the Final Exchange Ratio and the Post-Closing Statement with such changes as may have been previously agreed in writing by Parent and each Representative, shall be final and binding. If each Representative and the Parent fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“ Disputed Amounts ”) shall be submitted for resolution to the office of an impartial nationally recognized firm of independent certified public accountants mutually agreed between the Parent and each Representative (the “ Independent Accountant ”) who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any adjustments to the Post-Closing Statement or Final Exchange Ratio, as the case may be. The


parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountant shall only decide the specific items under dispute by the parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Post-Closing Statement and the Statement of Objections, respectively. The Independent Accountant shall make a determination as soon as practicable within thirty (30) days (or such other time as the parties hereto shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Post-Closing Statement and Final Exchange Ratio shall be conclusive and binding upon the parties hereto. Parent shall pay all fees and expenses of the Independent Accountant. Parent Representative shall have the exclusive power and authority to act on behalf of Parent pursuant to this Section, including the power to make all decisions and resolve or settle any disputes on behalf of Parent with respect to the matters contemplated by this Section.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF COMPANY

Except as set forth in the letter dated the date of this Agreement and delivered to Parent by Company concurrently with the execution and delivery of this Agreement (the “ Company Disclosure Letter ”), the Company represents and warrants to Parent as follows:

3.1 Organization and Qualification of the Company .

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

(b) The Company has all necessary corporate power and authority to own and operate the assets now owned by it and to carry on its business as currently conducted. The Company is presently qualified to do business as a foreign corporation in California and is not required to be licensed or qualified in any other foreign jurisdiction except where the failure to be so qualified or licensed would not have a Material Adverse Effect on the Company. The Company has delivered to Parent and Merger Sub complete and correct copies of the charter and bylaws of the Company as in effect as of the date hereof and the Closing Date.

3.2 Subsidiaries . Company does not own any capital stock of, or other equity or voting interests of any nature in, or any interest convertible, exchangeable or exercisable for, capital stock of or other equity or voting interests of any nature in, any other Person.

3.3 Capitalization .

(a) The authorized capital stock of the Company consists of 60,000,000 shares of Company Common Stock and 43,502,124 shares of Company Preferred Stock. As of the date hereof, (i) 6,981,241 shares of Company Common Stock are issued and outstanding, (ii) 7,703,785 shares of Company Preferred Stock are designated as Series A Preferred Stock, of which 7,703,785 shares are issued and outstanding and convertible into an aggregate of 7,703,785 shares of Company Common Stock, (iii) 2,567,390 shares of Company Preferred Stock are designated as Series B Preferred Stock, of which 2,567,390 shares are issued and outstanding and convertible into an aggregate of 2,567,390 shares of Company Common Stock, (iv) 3,256,601 shares of Company Preferred Stock are designated as Series C Preferred Stock, of which 3,168,882 shares are issued and outstanding and convertible into an aggregate of 3,168,882 shares of Company Common Stock, (v) 11,773,243 shares of Company Preferred Stock are designated as Series D Preferred Stock, of which 11,415,743 shares are issued and outstanding and convertible into an aggregate of 11,415,743 shares of Company Common Stock, (vi) 2,212,960 shares of Company Preferred Stock are designated as Series E Preferred Stock, of which 2,212,960 shares


are issued and outstanding and convertible into an aggregate of 2,212,960 shares of Company Common Stock, and (vii) 15,988,145 shares of Company Preferred Stock are designated as Series F Preferred Stock, of which 13,617,415 shares are issued and outstanding and convertible into an aggregate of 13,617,415 shares of Company Common Stock.

(b) The Company has outstanding convertible promissory notes issued in 2015 in the aggregate principal amount of $7,200,000 (the “ Company 2015 Convertible Notes ”). The principal and all accrued and unpaid interest under the Company 2015 Convertible Notes will be converted into Company Common Stock immediately prior to the Effective Time at a conversion price of $0.3204 per share, resulting in 24,840,295 additional shares of Company Common Stock being issued and outstanding immediately prior to the Effective Time assuming the Effective Time occurs on August 31, 2016.

(c) The Company has entered into, and may before Closing enter into additional, note subscription agreements to sell and issue convertible promissory notes prior to the Closing in the aggregate principal amount of up to $6,500,000 (collectively, the “ Company 2016 Convertible Notes ”). The principal and all accrued and unpaid interest under the Company 2016 Convertible Notes will be converted into Company Common Stock immediately prior to the Effective Time.

(d) Except as set forth in Sections 3.3(a) , 3.3(b) , 3.3(c) and 3.3(e) , there are no shares of capital stock of the Company issued and outstanding or issuable upon conversion of any derivative security. All of the Company Shares have been duly authorized and validly issued and fully paid and non-assessable. None of the Company Shares were issued in violation of any preemptive rights nor are they subject to any preemptive rights of any Person. All of shares of the Company’s capital stock and all options and warrants to acquire the Company’s capital stock have been issued and granted in all material respects in compliance with applicable securities Laws and other requirements of Law. The Company Stockholders are the sole record holders of the issued and outstanding capital stock of the Company.

(e) As of the date of this Agreement, the Company has outstanding Company Stock Options exercisable for 16,423,140 shares of Company Common Stock (10,344,566 of which Company Stock Options only become exercisable if the Closing occurs). All Company Stock Options were issued under the Company Stock Plans. The Company has made available to Parent true and complete copies of the Company Stock Plans and all stock option agreements evidencing the Company Stock Options. All Company Stock Options have been offered, issued, and delivered by the Company in all material respects in compliance with all applicable Laws.

(f) Except for the Company Convertible Notes, Company Stock Options and the Company Warrants set forth in Section 3.3(f) of the Company Disclosure Letter and any Company Stock Options that may be granted pursuant to the terms hereof prior to the Closing, there are no outstanding options, warrants, agreements, conversion rights, preemptive rights or other rights to subscribe for or purchase from the Company or any contracts or commitments providing for the issuance of, or the granting of rights to acquire, (i) any capital stock or other ownership interests of the Company, including, but not limited to the Company Shares; or (ii) any securities convertible into or exchangeable for any such capital stock or other ownership interests. There are no outstanding contractual obligations of the Company to transfer, issue, repurchase, redeem or otherwise acquire any outstanding shares of capital stock or other ownership interests of the Company, including, but not limited to the Company Shares. The Company neither owns nor has any contract, agreement or understanding to acquire, any equity securities or other securities of any Person or any direct or indirect equity or ownership interest in any other business. There are no rights to have the equity interests of the Company registered for sale to the public in connection with the Laws of any jurisdiction. The Company is not a party to any agreement (i) relating to the voting, transfer or control of any equity securities of the Company or (ii) containing restrictions on the transfer of the equity securities of the Company, other than those arising under applicable securities Laws. No Company Warrants will be outstanding as of the Effective Time.


(g) No more than thirty-five holders of Company Shares fail to satisfy the definition of “accredited investor” set forth in Rule 501(a) of Regulation D promulgated under the Securities Act.

3.4 Stock Ownership by the Company’s Stockholders . To the Knowledge of the Company, the holders of Company Shares have good title to, and are the sole record and beneficial owners of, the Company Shares, and the Company Shares owned by such stockholders are free and clear of any and all Encumbrances. To the Knowledge of the Company, the holders of the Company Shares are not a party to any voting trusts, stockholders agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Company Shares owned by such stockholders.

3.5 Authorization; Enforceability . The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company, and assuming due authorization, execution and delivery by Merger Sub and Parent, this Agreement constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that the enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws, or by equitable principles relating to the rights of creditors generally.

3.6 No Conflict; Governmental Consents . The execution, delivery and performance of this Agreement by the Company does not and will not (a) violate, conflict with or result in the breach of any provision of the certificate of incorporation or by-laws of the Company, (b) conflict with or violate in any material respect any Law or Order applicable to the Company, or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the Company Shares or on any of the other assets or properties of the Company pursuant to, any note, bond, mortgage, indenture, license, permit, lease, sublease or other material Contract to which the Company is a party or by which any of the Company Shares or any of such other assets or properties is bound or affected. The execution, delivery and performance of this Agreement by the Company does not and will not require any Approval or Order of any Governmental Entity, other than the filing of the Certificate of Merger with the Secretary of State of Delaware.

3.7 Board Approval . The board of directors of the Company, by resolutions duly adopted by unanimous vote at a meeting of all directors of the Company duly called and held and, as of the date hereof, not subsequently rescinded or modified in any way, has, as of the date hereof, (a) determined that this Agreement and the transactions contemplated hereby, including the Merger, are fair to, and in the best interests of, the Company’s stockholders, (b) approved and declared advisable the “agreement of merger” (as such term is used in Section 251 of the DGCL) contained in this Agreement and the transactions contemplated by this Agreement, including the Merger, in accordance with the DGCL, (c) directed that the “agreement of merger” contained in this Agreement be submitted to Company’s stockholders for adoption, and (d) resolved to recommend that Company’s stockholders adopt the “agreement of merger” set forth in this Agreement (collectively, the “ Company Board Recommendation” ) and directed that such matter be submitted for consideration of the stockholders of the Company.

3.8 Taxes . Except as set forth on Section 3.8 of the Company Disclosure Letter:


(a) All Taxes due and owing by the Company, whether or not shown on any Tax Return have been paid. All Tax Returns required to be filed by the Company have been timely filed and are true, correct, and complete in all material respects. All monies required to be withheld by the Company from employees, independent contractors, creditors, or other third parties for Taxes have been collected or withheld, and timely paid in full to the respective Governmental Entity. The Company is not currently the beneficiary of any extension of time within which to file any Tax Returns, other than automatic extensions requested in the ordinary course of business.

(b) There is no dispute, claim, audit, or other proceeding concerning any Tax liability of the Company pending, threatened or proposed. There are no Tax rulings, requests for rulings, or closing agreements relating to the Company that could affect the liability for Taxes of the Parent or the Company for any period (or portion of a period) after the Closing Date. The Company has not received notice of any Tax deficiencies of any kind assessed against the Company.

(c) The Company is not currently subject to any waiver of any statute of limitations in respect to Taxes or agreement to any extension of time with respect to a Tax assessment or deficiency.

(d) The Company has not been a member of an affiliated group filing a combined, consolidated, or unitary Tax Return and has no liability for the unpaid Taxes of any other Person (other than any Subsidiary) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract or otherwise.

(e) The Company is not a party to any Tax allocation or sharing agreement nor does the Company have any liability to any Person with respect to any previously terminated Tax sharing agreement or similar arrangement.

(f) The unpaid Taxes of the Company as of the date of the Company Financial Statements have been accrued on the Company Financial Statements in accordance with GAAP.

(g) No written claim has been made by an authority in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction.

(h) The execution of this Agreement and the consummation of the transactions contemplated by this Agreement have not and will not (either alone or upon the occurrence of any additional or subsequent event) result in any “parachute payment” (as such term is defined in Section 280G of the Code), acceleration, vesting or increase in benefits to any present or former employee, or service provider of any of the Company.

(i) The Company is not a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code.

(j) The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) “closing agreement” as described in Code §7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions occurring at or prior to the Closing or any excess loss account in existence at Closing described in Treasury Regulations under Code §1502 (or any corresponding or similar provision of state, local or foreign Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; (E) prepaid amount received on or prior to the Closing Date; or (F) election by the Company under Code §108(i) made on or prior to the Closing Date.


(k) The Company has not distributed stock of another Person, or has had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Code §355 or §361.

(l) The Company is not nor has it been a party to any “reportable transaction” as defined in Code §6707A(c)(2) and Regulation §1.6011-4(b).

3.9 Litigation; Compliance with Laws .

(a) There is no Action pending or, to the Knowledge of the Company, threatened against or affecting any of the Company or its respective assets. There is no Action initiated by the Company currently pending or which the Company currently intends to initiate.

(b) The Company is not (i) in material violation of any applicable Law, or (ii) subject to or in material default with respect to any Order to which the Company or its properties or assets (owned or used), is subject. The Company has, since inception, been in material compliance with each Law that is or was applicable to it or use of any of its assets.

(c) The Company has not received since inception any notice or other communication (whether oral or written) from any Governmental Entity or any other Person regarding (i) any actual, alleged, possible, or potential material violation of, or material failure to comply with, any Law or (ii) any actual, alleged, possible, or potential material obligation on the part of the Company to undertake, or to bear all or any material portion of the cost of, any remedial action of any nature.

(d) There is no Action pending or threatened in writing against or affecting the Company seeking to restrain or prohibit the Company’s entry into this Agreement or prohibit the Closing.

3.10 Bad Actor Disqualification . The Company has exercised reasonable care, in accordance with SEC rules and guidance, to determine whether any Company Covered Person (as defined below) is subject to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) through (viii) under the Securities Act (“ Disqualification Events ”). To the Company’s knowledge, no Company Covered Person is subject to a Disqualification Event, except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has complied, to the extent applicable, with any disclosure obligations under Rule 506(e) under the Securities Act. “ Company Covered Persons ” are those persons specified in Rule 506(d)(1) under the Securities Act, including the Company; any predecessor or affiliate of the Company; any director, executive officer, other officer participating in the offering, general partner or managing member of the Company; and any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power.

3.11 No Brokers or Finders. No agent, broker, finder, or investment or commercial banker, or other Person or firm engaged by or acting on behalf of the Company in connection with the negotiation, execution or performance of this Agreement or the transactions contemplated by this Agreement, is or will be entitled to any brokerage or finder’s or similar fee or other commission as a result of this Agreement or such transactions.

3.12 Intellectual Property Rights .

(a) The Company owns, free and clear from all Encumbrances other than Permitted Encumbrances, or otherwise possesses legally enforceable rights to use pursuant to a valid and enforceable written license, sublicense, agreement, or permission all Intellectual Property reasonably necessary to the conduct of the Company’s business as currently conducted and for the development,


manufacture, marketing and sale of Products. The Intellectual Property owned by the Company (“ Owned Intellectual Property ”) and the Intellectual Property licensed to the Company (“ Licensed Intellectual Property ”) comprise all of the Intellectual Property that is used by the Company or reasonably required for the continued conduct of the Company’s business as currently conducted and for the development, manufacture, marketing and sale of Products. The Company owns or is the valid licensee of all Company Intellectual Property and each item of the Company Intellectual Property owned by the Company immediately prior to the Effective Time will be owned or available for use by the Surviving Entity on identical terms and conditions immediately subsequent to the Closing hereunder.

(b) Section 3.12(b)(i) of the Company Disclosure Letter sets forth a true, correct, and complete list of all Intellectual Property in which the Company has an ownership interest (indicating whether such interest is sole ownership or joint ownership) that is issued by or registered with a Governmental Entity or for which an application for issuance or registration has been filed with a Governmental Entity.  Section 3.12(b)(ii) of the Company Disclosure Letter sets forth a true, correct, and complete list of all Licensed Intellectual Property that is material to the Company’s business but is not otherwise identified in Section 3.12(b)(i) of the Company Disclosure Letter. Section 3.12(b)(iii) of the Company Disclosure Letter sets forth a true, correct, and complete list of all trademarks, service marks and other trade designations that are Owned Intellectual Property and not otherwise identified in Section 3.12(b)(i) of the Company Disclosure Letter.

(c) The use of the Company Intellectual Property and the operation of the Company’s business as currently used and conducted and as currently contemplated, has not and will not interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any valid and enforceable Intellectual Property rights of third parties and, to the Knowledge of the Company, there are no facts indicating a likelihood of the foregoing. The Company has never received any charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or conflict (including any claim that the Company must license or refrain from using any Intellectual Property rights of any third party). The Company is not a party to any past, nor is there any pending or, to the Knowledge of the Company, threatened, action, lawsuit or other judicial, arbitral or administrative proceeding involving or relating to any Company Intellectual Property, including, without limitation, involving any claim that Company infringed, misappropriated or violated the Intellectual Property Rights of any third party.

(d) The Company has taken all necessary and desirable actions to maintain and protect all of the Company Intellectual Property. Without limiting the foregoing: (i) the Company has, and to the Knowledge of the Company, all manufacturers, suppliers, distributors, resellers, and licensees have, complied in all material respects with all applicable Laws relating to marking of Products covered by the Company Patents; (ii) to the Knowledge of the Company, all Products have been properly marked and no Products have been falsely marked; and (iii) the Company has taken all steps reasonably necessary to protect and preserve the confidentiality of all confidential Company Intellectual Property.

(e) The Company has complied in all material respects with and is presently in compliance in all material respects with all foreign, federal, state, local, governmental (including, but not limited to, the Federal Trade Commission and State Attorneys General), administrative, or regulatory Laws applicable to any Company Intellectual Property or to personal information and the Company shall take all steps necessary to ensure such compliance until Closing.

(f) The only licenses, settlement agreements, covenants not to sue or other agreements in which the Company or any Company predecessor has granted any rights or interest in or to, or permitted use of, any material Company Intellectual Property by any third party or affiliate are identified in Section 3.12(f) of the Company Disclosure Letter (the “ Intellectual Property Licenses ”). The Intellectual Property Licenses are valid, binding, and enforceable between the Company and the other parties thereto and are in full force and effect. There is no material breach of any Intellectual Property License by the Company or, to the Knowledge of the Company, by any other party thereto.


(g) The Owned Intellectual Property and, to the Knowledge of the Company, the Licensed Intellectual Property, is valid and enforceable and in full force. The Owned Intellectual Property and, to the Knowledge of the Company, the Licensed Intellectual Property: (i) is not subject to any opposition, cancellation, interference, reissue, reexamination, derivation, revocation or post-grant proceeding and, to the Knowledge of the Company, no such proceeding is or has been threatened; (ii) has not expired, lapsed, been cancelled, or become expressly abandoned; (iii) is validly applied for and registered; and (iv) is not the subject of any judicial, administrative or arbitral order, award, decree, injunction, lawsuit, proceeding or stipulation, or of any other proceeding or action pending before any Governmental Entity anywhere in the world. All maintenance fees and annuities required with respect to such Company Intellectual Property to date have been timely paid in full. The Company Patents include all Patents to which any Company Patent has been terminally disclaimed.

(h) The Company and its representatives and, to the Knowledge of the Company, all prior and current owners of any Owned Intellectual Property have (A) complied with the duty of candor and disclosure to the United States Patent and Trademark Office and analogous Laws outside the United States with respect to Owned Intellectual Property; (B) not knowingly misrepresented or failed to disclose any fact or circumstance (including, with respect to Company Patents, the name of any inventor of subject matter claimed in any Company Patent or the existence of any material prior art) in connection with the prosecution of any Owned Intellectual Property; and (C) not otherwise knowingly engaged in any conduct, or failed to perform any act, the result of which could reasonably be expected to materially adversely affect the validity or enforceability of any Owned Intellectual Property.

(i) To the Knowledge of the Company, (i) there is no prior art that could reasonably be expected to invalidate any Company Intellectual Property, and (ii) no fact or circumstance exists that could reasonably be expected to otherwise materially adversely affect the validity or enforceability of any Company Intellectual Property.

(j) The Company has not sent any notice to or asserted or threatened any action or claim against any third party involving or relating to the Company Intellectual Property and, to the Company’s Knowledge, at no time has any Person ever interfered with, infringed, or misappropriated any Company Intellectual Property.

(k) The Company has not made a previous assignment, transfer or agreement in conflict herewith or constituting a present or future assignment of or encumbrance of any of the Company Intellectual Property.

(l) Except as disclosed in Section 3.12(l)(i) of the Company Disclosure Letter, each officer, employee, consultant and agent of the Company that has participated in the creation or development of any material Owned Intellectual Property has executed a written assignment assigning to the Company any and all Intellectual Property rights created by such Persons during their respective employment or engagement periods. Except as disclosed in Section 3.12(l)(ii) of the Company Disclosure Letter, no Company Intellectual Property is co-owned by, exclusively licensed to, or otherwise controlled by any other Person, including any current or former employee, officer, director, consultant, contractor, or clinical or research partner of the Company. The Company does not owe any compensation or remuneration (other than the general compensation for employment or services) to a current or former employee, officer, director, consultant, or contractor for any Owned Intellectual Property. No Company Intellectual Property is, or could reasonably be expected to become, as a result of any action or failure to act on the part of the Company or other owner of such Company Intellectual Property, subject to any (i)


covenant not to sue, release, consent, or similar limitation on enforcement of such Company Intellectual Property; (ii) option to acquire or reversionary right; or (iii) grant of any right to any recoveries or proceeds from the enforcement or exploitation of such Company Intellectual Property.

(m) By executing and performing its obligations under this Agreement, Company is not in violation of any agreement between Company and any third party relating to any of the Company Intellectual Property.

(n) Except as disclosed in Section 3.12(n) of the Company Disclosure Letter: (i) no funding of any Governmental Entity and no Intellectual Property, facilities, personnel, or other resources of any multi-national, bi-national, or international organization, university, college, or other academic institution, medical institute, or research center were used, directly or indirectly, in the creation or development of any Products or any material Owned Intellectual Property by or for the Company or any other owner of any Owned Intellectual Property, and no Product or Company Patent was developed pursuant to the requirements of a contract with any Governmental Entity; and (ii) no Governmental Entity has any right, title, or interest (including any “march in” rights) in or to any Company Intellectual Property or Product.

3.13 Regulatory Compliance .

(a) Except as set forth in Section 3.13(a) of the Company Disclosure Letter, during the three (3) year period ending on the Closing Date, the Company has not had any product or manufacturing site subject to a Governmental Entity (including FDA) shutdown or import or export prohibition, nor received any FDA Form 483 or other Governmental Entity notice of inspectional observations, “warning letters,” “untitled letters” or requests or requirements to make changes to the Company’s products.

(b) The Company has all material permits and Approvals necessary to conduct its business as presently conducted, including all such permits and Approvals required by the FDA or any other applicable Governmental Entity responsible for the oversight and approval of the research, development, manufacturing, distribution, or commercialization of drug, biologic, or medical device products (collectively with the FDA, “ Regulatory Authorities ”). A list of all such permits and Approvals is set forth in Section 3.13(b) of the Company Disclosure Letter. All such permits and Approvals are valid and in full force and effect, and no suspension, revocation or termination of any such permit or Approval is pending or, to the Knowledge of the Company, threatened, other than ordinary course terminations subject to renewal upon expiration. All applications required to renew each such permit and Approval have been timely filed.

(c) To the Knowledge of the Company, all preclinical and human clinical trials conducted by or on behalf of the Company that have been, or are intended to be, submitted to Regulatory Authorities, including the FDA, in connection with an application for a Company Product approval, have been or are being conducted in material compliance with applicable Laws, including the requirements of Good Clinical Practice and informed consent regulations, and all applicable Laws relating to protection of human subjects, Good Laboratory Practices and Good Manufacturing Practices.

(d) Neither the Company nor, to the Company’s Knowledge, any owners, officers, directors, employees and agents, have made an untrue statement of material fact in any filing or other written submission to the FDA or any other Regulatory Authority, or to the Company’s Knowledge, in any records or documentation prepared or maintained to comply with applicable Laws. The Company has not failed to disclose a material fact required to be disclosed to any Regulatory Authority.


(e) The Company is not the subject of any pending or, to the Knowledge of the Company, threatened investigation in respect of the Company or its products by any Regulatory Authority, including without limitation by the FDA pursuant to its “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” Final Policy set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto. Neither the Company nor, to the Company’s Knowledge, any of its owners, officers, directors, employees and agents, have paid or given, offered or promised to pay or give, or authorized or ratified the illegal payment or giving, directly or indirectly, of any monies or anything of value to any national, provincial, municipal or other government official or employee or any political party or candidate for political office or Governmental Entity for the direct or indirect purpose of influencing any act or decision of such Person or of the Governmental Entity to obtain or retain business, or direct business to any person or to secure any other improper benefit or advantage.

(f) Neither the Company, nor to the Knowledge of the Company, any officer, employee, consultant, contractor, principal investigator, clinical investigator or agent of the Company is or has been (i) suspended, excluded, debarred, or convicted of any federal or state crime that would reasonably be expected to result in mandatory or permissive suspension, exclusion, or debarment, under 21 U.S.C. Section 335a or any similar federal, state or foreign legal requirement or (ii) suspended, excluded, debarred, or convicted of any federal or state crime that would reasonably be expected to result in mandatory or permissive suspension, exclusion, or debarment under 42 U.S.C. Section 1320a–7, or suspension or debarment or ineligibility on the U.S. General Services Administration System for Award Management list (formerly known as the “Excluded Parties List System” or “EPLS”), or in each case any similar federal, state or foreign applicable legal requirement which would prohibit an individual or entity from conducting business with a federal or state agency.

(g) During the three (3) year period ending on the Closing Date, no product of the Company has been recalled, suspended, discontinued or the subject of a refusal to file, clinical hold, deficiency or similar action letter (including any correspondence questioning data integrity) as a result of any action by the FDA or any other similar foreign Governmental Entity in the United States or outside of the United States.

(h) None of the Company or the officers, directors, managing employees or agents of the Company: (i) have engaged in any activities which are prohibited under, or are cause for civil penalties or mandatory or permissive exclusion from participation in any Federal health care program (as defined in Section 1128B(f) of the U.S. Social Security Act (together with all regulations promulgated thereunder, “ SSA ”)) under Sections 1128, 1128A, 1128B, or 1877 of the SSA or similar state or local statutes, including knowingly and willfully offering, paying, soliciting or receiving any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind in return for, or to induce, the purchase, lease, or order, or the arranging for or recommending of the purchase, lease or order, of any item or service for which payment may be made in whole or in part under any such program; (ii) have had a civil monetary penalty assessed against them under Section 1128A of SSA; (iii) have entered into, orally or in writing, any financial arrangement with a physician or a family member of a physician which is prohibited under the Ethics in Patient Referrals Act, also known as the Stark Law, 42 U.S.C. Section 1395nn, or a similar state statute or regulation; (iv) have engaged in any transaction, directly or indirectly, which violates the federal False Claims Act, 31 U.S.C. Sections 3729-3733; or (v) have been convicted (as defined in 42 C.F.R. §1001.2) of any of the categories of offenses described in Sections 1128(a) or 1128(b)(1), (b)(2), or (b)(3) of SSA or any similar state statute which prohibits the inducement of referrals or impermissible financial arrangements with physicians.

(i) The Company has complied in all material respects with all applicable Laws governing data protection, privacy, security, and the use, disclosure, processing or storage of personal or individually identifiable information, howsoever defined under such Laws, Contracts or policies


(“ Personal Information ”). Section 3.13(i) of the Company Disclosure Letter sets forth any agreement between the Company and any third party with respect to the privacy, security, or processing of Personal Information that is regulated by any Law of any jurisdiction outside the United States, including without limitation any model contracts for the transfer of personal data to third countries adopted by the European Commission (each a “ Processing Agreement ”). The Company is not in material violation of or in material default under any such Processing Agreement. Except as set forth on Section 3.13(i) of the Company Disclosure Letter, no consent, permission, or notice is required to be made to or obtained from any third party with respect to any Personal Information owned or used by or on behalf of the Company in connection with the execution, delivery, and performance of this Agreement.

3.14 Company Financial Statements . Section 3.14 of the Company Disclosure Letter includes the Company Financial Statements, which will be updated prior to the Closing Date pursuant to Section 7.1(m) . The Company Financial Statements: (a) are derived from and are in accordance with the books and records of the Company; (b) fairly present in all material respects the financial condition of the Company at the dates therein indicated and the results of operations and cash flows of the Company for the periods therein specified; and (c) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods involved. The Company has no Liabilities except for (i) those shown on the Company Balance Sheet, (ii) those that were incurred after the date of the Company Balance Sheet in the ordinary course of business, (iii) executory liabilities expressly provided for in any of the Company’s Contracts (that have been provided to Parent) that are not required to be reflected in the Company Financial Statements under GAAP and which are not based upon any breach or default of such contracts, and (iv) liabilities incurred in connection with the negotiation, preparation or execution of this Agreement or pursuant to and in accordance with this Agreement and taken into account in the calculation of Transaction Expenses. All reserves established by the Company that are set forth in or reflected in the Company Balance Sheet have been established in accordance with GAAP applied on a consistent basis. The unaudited Company Financial Statements do not contain footnotes required under GAAP, and are subject to normal year-end adjustments, which will not be material. The books and records of the Company are maintained in compliance in all material respects with all applicable legal and accounting requirements and in a manner that allows the Company to present fairly in all material respects the Company’s results of operations and financial condition in accordance with GAAP. The Company has disclosed to its outside auditors (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting. The Company maintains books and records that are accurate in all material respects and an adequate system of internal accounting controls sufficient to provide reasonable assurance that (I) transactions are executed in accordance with management’s general or specific authorization; (II) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; and (III) access to assets is permitted only in accordance with management’s general or specific authorization.

3.15 Absence of Certain Changes or Events . Since December 31, 2015, except as contemplated by this Agreement or incident to the transactions contemplated hereby, (a) there has been no event, occurrence or development that, individually or in the aggregate, has resulted in or could reasonably be expected to result in a Material Adverse Effect on the Company, (b) the Company has conducted its business only in the ordinary course consistent with past practices, and (c) the Company has not taken or experienced any of the actions or events set forth in Section 6.1(e) . The Company has not taken any steps to seek protection pursuant to any bankruptcy Law nor does the Company have any Knowledge of or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or of any fact that would reasonably lead a creditor to do so. The Company is not Insolvent, nor will the Company be Insolvent after giving effect to the transactions contemplated hereby to occur at the Effective Time (other than as a result of any facts or circumstances relating to Parent or Merger Sub).


3.16 Material Agreements.

(a) A list of the written material agreements of the Company is set forth on Section 3.16 of the Company Disclosure Letter (each, a “ Company Material Agreement ). The Company and, to the Company’s Knowledge, each other party thereto, has in all material respects performed all the obligations required to be performed by them to date (or such non-performing party has received a valid written waiver with respect to its non-performance), and the Company has received no written notice of breach or default and is not in breach or default (with due notice or lapse of time or both), under any Company Material Agreement which would permit termination, modification or acceleration of payment or performance under any Company Material Agreement. The Company has no Knowledge of any breach or termination, or anticipated breach or termination, by the other party to any Company Material Agreement.

(b) True, correct and complete copies of each Company Material Agreement, as amended to date, have been provided to Parent and Merger Sub. Each of the Company Material Agreements is in full force and effect, and is a legal, binding and enforceable obligation of or against the parties thereto, subject to applicable bankruptcy, insolvency and other similar Laws affecting the enforceability of creditors’ rights generally, general equitable principles and the discretion of courts in granting equitable remedies. The Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in any Company Material Agreement.

(c) The Company will collect the full amount of the $750,000 cash grant from the Maryland Stem Cell Research Fund, without any offset for any reserves, allowances or otherwise, in accordance with the terms of such grant, and such amount shall not be refunded or remain subject to refund.

3.17 Title to Properties and Assets; Encumbrances . The Company has good and marketable title to its properties and assets, and has good title to its leasehold interests, in each case subject to no Encumbrance, other than (a) Encumbrances for current Taxes (i) not yet due and payable and (ii) provided for on the applicable financial statements or incurred in the ordinary course of business consistent with past practices after the date of the Company Balance Sheet, (b) de minimis Encumbrances and defects in title which do not in any case, individually or in the aggregate, materially detract from the value, continued ownership, use or operation of the properties and assets subject thereto, or materially impair the business operations of the owner or lessee thereof, and that have arisen in the ordinary course of business consistent with past practices, and (c) the Encumbrances set forth on Section 3.17 of the Company Disclosure Letter (the “ Permitted Encumbrances ”). With respect to the property and assets it leases, the Company is in compliance with such leases in all material respects and holds a valid leasehold interest free of all Encumbrances other than Permitted Encumbrances. The Company’s properties and assets are in good condition and repair in all material respects, subject to ordinary wear and tear and routine maintenance, and are reasonably sufficient for the operation of the Company’s business as conducted and contemplated to be conducted as of the date hereof. The Acquired Entities do not currently own, and have never owned, any real property.

3.18 Employees; Employee Benefit Plans .

(a) The employment of each employee of the Company is terminable at will. No employee of the Company has been granted the right to continued employment by the Company or to any material compensation following termination of employment with the Company. The Company is not in


default with respect to any obligation to any of its employees in any material respect. No employee of the Company is represented by any labor union or covered by any collective bargaining agreement. There is no pending or, to the Company’s Knowledge, threatened dispute or Action involving the Company and any employee or group of its employees, including, without limitation, charges of discrimination, retaliation, or violation of equal opportunity or anti-discrimination Laws. The Company has complied and is currently complying in all material respects with all applicable Laws relating to employment and employment practices, terms and conditions of employment, and wages and hours. The Company has not been notified of any pending or threatened investigation by any branch or department of U.S. Immigration and Customs Enforcement (“ ICE ”) or other federal agency charged with administration and enforcement of federal immigration laws concerning the Company, and the Company has not received any “no match” notices from ICE, the Social Security Administration or the Internal Revenue Service.

(b) Section 3.18(b) of the Company Disclosure Letter sets forth a complete and correct list of each Benefit Plan. A copy of each Benefit Plan has been made available to Parent, including, (A) the three (3) most recent annual report on Form 5500 filed with the IRS with respect to each Benefit Plan (if any such report was required) and schedules thereto, (B) the most recent summary plan description or similar document for each such Benefit Plan for which such summary plan description is required or was otherwise provided to plan participants or beneficiaries, (C) the most recent actuarial report or other financial statement, if any, relating to such Benefit Plan, (D) the most recent determination letter or opinion letter, if any, issued by the IRS with respect to such Benefit Plan and any pending request for such a determination letter, (E) each trust agreement and insurance annuity contract, if any, relating to any such Benefit Plan, (F) the three (3) most recent nondiscrimination testing results (if applicable) and (G) written descriptions of all non-written agreements relating to the Benefit Plans.

(c) Neither the Company nor any Company ERISA Affiliate participates currently or has ever participated in and is not required currently and has never been required to contribute to or otherwise participate in any multiemployer plans (as defined in Section 3(37) of ERISA), any multiple employer plan (as defined in Section 413(c) of the Code), any “defined benefit plan” as defined in Section 3(35) of ERISA, any pension plan subject to the funding standards of Section 302 of ERISA or Section 412 of the Code, any plan, program or arrangement subject to Title IV of ERISA, or any multiple employer welfare arrangement as defined in Section 3(40) of ERISA. Each Benefit Plan has been operated, maintained and administered in accordance with its terms and with the requirements of applicable Law, including ERISA, the Code and the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010. There has been no violation of or failure to comply with ERISA or the Code with respect to the filing of applicable returns, reports, documents and notices regarding any of the Benefit Plans with any Governmental Entity or the furnishing of such notices or documents to the participants or beneficiaries of the Benefit Plans. Neither the Company, nor any Company ERISA Affiliate, “party in interest” or “disqualified person” with respect to the Benefit Plans has engaged in a material “prohibited transaction” within the meaning of Section 4975 of the Code or Section 406 of ERISA for which an applicable statutory or administrative exemption does not exist. All benefits, contributions and premiums relating to each Benefit Plan have been timely paid in accordance with the terms of such Benefit Plan and all applicable laws and accounting principles, and all benefits accrued under any unfunded Benefit Plan have been paid, accrued or otherwise adequately reserved to the extent required by, and in accordance with, GAAP.

(d) Each Benefit Plan intended to be “qualified” within the meaning of Section 401(a) of the Code has received a determination or opinion letter from the IRS stating that it (or the master or prototype form on which it is established) is so qualified, and to the Company’s Knowledge, no event has occurred since the date of such determination or opinion letter that would reasonably be expected to adversely affect the qualified status of any such Benefit Plan.


(e) Each Benefit Plan that is a “group health plan” has complied in all respects in form, operation and administration with the employer shared responsibility mandate, to the extent applicable, under Code Section 4980H, and the Company is not subject to, nor reasonably could be expected to be subject to, any “assessable payments” (within the meaning of Code Section 4980H). Except as otherwise provided herein, the execution of this Agreement or the consummation of the Merger will not (either alone or upon the occurrence of any additional events that, standing alone, would not trigger such benefits) (i) entitle any Person to severance payable by the Company or its Affiliates, (ii) accelerate the time of funding, vesting or payment of any benefits under any of the Benefit Plans or (iii) result in the payment of compensation that would, in combination with any other payment, result in an “excess parachute payment” with respect to any Person within the meaning of Section 280G(b) of the Code. Each Benefit Plan that is a “nonqualified deferred compensation” plan within the meaning of Section 409A of the Code has been operated in material compliance with such section and all applicable regulatory guidance (including notices, rulings and proposed and final regulations). The Company does not have any actual or potential obligation to reimburse or otherwise “gross-up” any Person for the interest or additional tax set forth under Section 409(A)(a)(1)(B) of the Code.

(f) There are (i) no current, pending or, to the Company’s Knowledge, threatened investigations by any Governmental Entity involving Benefit Plans, and (ii) no pending, asserted or, to the Company’s Knowledge, threatened claims (other than routine claims for benefits), suits or proceedings against any Benefit Plans. None of the Benefit Plans provides for post-employment life, health or medical insurance or life, health, medical or other welfare benefits or coverage for any participant or any beneficiary of a participant following termination of employment, except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or applicable state law or otherwise.

(g) Each individual who is classified by the Company or any Affiliate thereof as an independent contractor has been properly classified for purposes of participation and benefit accrual under each Benefit Plan.

3.19 Obligations of Management . Each officer and key employee of the Company is currently working full time in the conduct of the business of the Company. The Company has no Knowledge that any officer or key employee of the Company is planning to work less than full time in the future. To the Company’s Knowledge, (a) no officer or key employee is currently working or plans to work for a competitive enterprise, whether or not such officer or key employee is or will be compensated by such enterprise, (b) is planning to leave the employ of the Company or (c) is working for the Company in violation of any contractual obligation to any other Person.

3.20 Obligations to Related Parties . There are no loans, leases, agreements, commitments or other continuing transactions between the Company and (a) any executive, officer, director or manager of the Company or any member of any such Person’s immediate family, (b) any Person that owns more than ten percent (10%) of the equity securities of the Company or any member of any such Person’s immediate family, or (c) any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with any of the foregoing Persons (each such Person identified in (a), (b) or (c), a “ Related Person ”). To the Company’s Knowledge, no Related Person has any direct or indirect ownership interest in any Person with which the Company has a business relationship or any Person that competes with the Company, except in connection with the ownership of securities of publicly-traded companies (but not exceeding two percent (2%) of the outstanding capital stock or other securities of any such company). To the Company’s Kno


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